A survey by Zurich, which appeared in the latest SME Risk Index, has shown that the majority of late payments to small businesses are owed by firms larger than themselves. More than half (53 per cent) of late payments are attributed to large firms, which indicates that SMEs are reliant on retaining their business.
The average SME is owed more than £16,000; a risky situation to be in for small businesses, which lack the reserve cash flow of large firms. Paul Tombs, head of SME proposition at Zurich, said, "[Working together] is a two way street and large organisations are simply taking too long to pay small suppliers... It is not sustainable."
The UK government is soon to appoint a new Small Business Commissioner, whose job, in part, will be to support SMEs in resolving payment disputes. Almost three quarters of SMEs support this idea, but half think that the government should be doing even more to help. Tombs said that it is important that the Commissioner be "more than just a figurehead."
Almost half of SMEs (45 per cent) who face late payments are forced to wait up to three months before being paid, Zurich's survey shows; and 14 per cent must wait up to six months. Almost two-thirds (64 per cent) have to wait a month to receive money for late payments (already defined as those that are more than 30 days overdue).
Late payments are a leading factor in SMEs being forced to close their business. According to figures on YouGov, around 50,000 such closures could be avoided every year if payments were made on time. Almost 40 per cent of SMEs said that late payments had had a significant impact on their cash flow, while a quarter said that their business had had been forced to go into its overderaft because of the same.
Scientists create a virtual reality simulation of a black hole sitting at the centre of the Milky Way
Simulations like this can help people understand complicated systems in the universe in a better way
The most luminous galaxy ever discovered is cannibalising at least three of its smaller neighbours, study finds
The galaxy radiates at 350 trillion times the luminosity of the Sun
Researchers modify genetic code of cancer-killing virus so it can target cells that protect cancer from immune system
Changing the genetic coding causes the infected cancer cells to produce a protein that kills the fibroblast cells that protect cancer
The findings can help improve the current understanding of brain development disorders, such as epilepsy or autism